A Delaware Banking Corporation - Case Study Example

John Doe Prof. Richard Roe Law 101 06 April 2006 Term Paper on Law Questions A Delaware banking corporation was d as trustee for the largeestate of a wealthy individual in that individual's will. The beneficiaries of the trust are the deceased's two children, one of whom lives in Pennsylvania and the other in Florida. The bank does business in Delaware only. Can the beneficiary in Florida successfully require the bank to submit to the jurisdiction of Florida courts [Hanson v. Denckla, 357 U.S. 235 (1958).] The case at bar can be resolved in the negative following the ruling held in the case of Hanson vs. Denckla. In that case, a trustor in Florida established a trust with a bank in Delaware had died, leaving her grandchildren as the beneficiaries. Prior to her death, she had lived in Delaware and later moved to Florida, and still performed acts of administration and received some proceeds of the trust. The heirs had filed an action in Florida against the bank in Delaware claiming that the trust should go to the Estate of the deceased. The court held in favor of the heirs, and declared that the money held in the trust should be included in the Estate. While the prior case was pending resolution, the grandchildren had also filed in Delaware an action for determination of distribution of the trust. After determination of the Florida case, the heirs had tried to introduce the decision in their favor in the Delaware case as a bar by res judicata, which was denied by the latter, stating that the Florida court did not have jurisdiction over the bank. Furthermore, the Delaware court held the trust to be valid and in favor of the grandchildren. By appeal to the U.S. Supreme Court, both cases were consolidated and the High Court held in favor of the Delaware court, stating that the Florida court could not exercise jurisdiction over a non-resident with only sporadic and inadvertent contacts with that State. The ruling stems from the settled rule that a party may not be called upon to defend an action in a foreign tribunal anent proof that he has had the "minimal contacts" with that state, being a prerequisite to acquisition of jurisdiction over him. By application of that rule in the case at bar, the High Court held that the trustee bank in Delaware had no office, conducted no business or any advertisement in Florida. The remittances of the trust income to the decedent were done when she resided in Florida, but no business acts in the latter State. As such, the Florida Court's decision was reversed as it was not proven that the Delaware Bank had performed any minimal contacts in Florida, and thus Florida had no jurisdiction over it. 2) United Arab Shipping company (UASC) is a corporation formed under the laws of Kuwait. Its capital stock is wholly owned by the governments of Kuwait, Saudi Arabia, the United Arab Emirates, Qatar, Iraq, and Bahrain. No single government owned more than 19.33% of UASC's shares, and the corporation was created by a treaty among the owner nations. Three seamen who were injured while working for UASC Brought suit against it in federal district court in the United States. UASC maintains it enjoys sovereign immunity. The seamen claim it is a commercial enterprise and not entitled to immunity. Who is correct [Mangattu v. M/V IBN Hayyan, 35 F.3d 205 (5th Cir. 1994)] The UASC's contention is correct, as properly held by the U.S. Court of Appeals decision in Mangattu v. M/V IBN Hayyan. In that case, the Court upheld the district court's decision finding the United Arab Shipping Co (UASC) as a foreign state, by virtue of the provisions of the Foreign Sovereign Immunities Act. In that case, the three appellants were seamen employed by the UASC, and had filed an action for unpaid wages, double wages, personal injuries and damaged in personam against UASC as owner of the vessel and in rem against the M/V IBN Hayyan. Subsequently, the in rem action was dismissed, but trial continued on the in personam action, where the seamen prayed for attachment of another vessel owned by UASC stating a maritime lien against the M/V IBN Hayyan. Since the latter vessel had already left American territory, the seamen sought to attach the M/V IBN Al-Atheer which was docked at port. This attachment was initially granted, only to be reversed by the same judge upon finding that the UASC was classified as a foreign state under the FSIA, being wholly owned by six foreign sovereign states. The owner-states were Saudi Arabia, Kuwait, Qatar, U.A.E., Iraq and Bahrain. The former five states each owned 19.33% while the latter state owned 3.335% of UASC. On appeal, as earlier mentioned, the Court of Appeals upheld the ruling that the UASC was a foreign state through an examination of the definition of a foreign state in Sec. 1603 of the FSIA. The court held that the UASC had met the concurrent requirements in Sec. 1603 (b) for a foreign state classification. Clearly, the UASC was a separate corporate person, thus the first requirement was met. Discussion centered on the application of the second and third requisites, both held in the affirmative. As an entity, the seamen assailed the UASC's juridical status as a treaty-created entity, stating that in the Agreement for Establishment and Articles of Association forming the UASC, the word treaty was never used. The Court of Appeals quickly disposed of this contention by stating the fact that both documents showed their full force and effect in all participant States, even to the extent of prejudicing local laws. This is indeed characteristic of a treaty as a compact made between two or more independent states for a common welfare. Thus, a treaty binds the participant states as law and contract between them, and full force and effect is to be applied to its provisions. Hence, an entity 100% owned by six foreign states created by an agreement qualifies the UASC under Sec. 1603 (b) (2) of the FSIA. The third requisite was likewise settled by the Court, defeating the presumption that a foreign state establishing a company under the laws of another state with the intention to engage in private commercial enterprise. However, in the Agreement, it was clear that the UASC was created by a treaty given force of law in all its participant nations, and incorporated under the laws of one of its members. Thus, the UASC has satisfied the triad of requisites under Sec. 1603, and qualified under the classification of a foreign state. Hence further, the properties of a foreign state enjoy immunity from attachment, arrest and execution under Sec. 1609 of the FSIA. 3)Mace Industries, Inc., sent a quotation to Paddock Pools for water treatment equipment. Paddock responded with a purchase order that had the following written on its reverse side: "THE SELLER AGREES TO ALL OF THE FOLLOWING TERMS AND CONDITIONS." The clause was then followed by language stating that acceptance was expressly conditional upon Mace's acceptance of the terms. Problem between the parties developed. Paddock says there is no contract because of its conditional acceptance. Mace maintains that Section 2-207 applies and there was a contract, with the only issues being the additional terms Paddock wrote on its purchase order and whether they are part of the contract. Who is correct [Mace Industries, Inc. v. Paddock Pool Equipment Co., Inc., 339 S.E.2d 527 (S.C. 1986)] Paddock Pool is correct, there was no contract. In the abovementioned problem, the issue revolves around the supposed expressly conditional acceptance on the part of Mace with the terms and conditions of Paddock's purchase order. Under UCC subsection 2-207(1), an acceptance containing "expressly conditional" language buried in small type or in an inconspicuous place on the form usually will not be sufficient to prevent the form from being a true acceptance. However, the case of Mace Industries, Inc. v. Paddock Pool Equipment Co., Inc. held that the provision stating that acceptance was subject to its terms and conditions in not within the exception of Section 2207(1). In the case at bar, Paddock's "expressly conditional" acceptance statement does not conform to the exception to the general rule found in 2-207(1), since the terms and conditions clause was placed on the reverse side of the purchase order. Thus, the court held that there was no acceptance resulting in a counteroffer under 2-207(1), because the acceptance's conditional nature must be expressed clearly in such a way to notify the offeror that the offeree is unwilling to proceed with the transaction unless the additional or different terms are included in the contract. Works Cited Hanson v. Denckla. 357 U.S. 235. 1958. Mace Industries, Inc. v. Paddock Pool Equipment Co., Inc.. 339 S.E.2d 527. 1986 Mangattu v. M/V IBN Hayyan. 35 F.3d 205. 1994 Read More